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DESPITE AUSTRALIA’S talent short labour market, a recent report has found that almost 50 per cent of companies have no formal process in place to identify and develop high potential employees, presenting HR with an opportunity to get involved and influence executive business leaders at a strategic level.

“HR professionals can play a pivotal role in sponsoring and casting the flashlight forward to help executives understand that high potential staff may whack some weight into the performance of their organisation,” said Matthew Dale, national manager of talent management for Hudson, which released the report.

HR managers are vital to the process, he said, as they ensure the correct systems and processes are put in place to underpin the program and subsequently ensuring processes are adhered to and the integrity of the program maintained.

The study, which took in almost 7,500 employers nationally, found that of the 52 per cent of organisations with formal high potential programs in place, almost 100 per cent said they delivered benefits to their business. The benefits were cited as retaining and motivating key talent (31 per cent), development of future leaders (27 per cent) and planning for the future/mitigating risk (24 per cent).

The survey also showed that when assessing someone’s suitability for a high potential program, employers use measures such as manager’s rating (37 per cent) and performance data (35 per cent) over other assessment options like 360 degree surveys (12 per cent), psychometric assessment (7 per cent) or assessment centres (5 per cent).

For HR and senior management, the first step is in acknowledging that potential is different from performance. “Potential is typically foreshadowed by a higher cognitive ability and a willingness to progress; they are people who have drive as well as resilience and emotional intelligence. While many of those things underpin high performance it is important to separate that definition out because most high potential people are actually high performers,” Dale said.

Many organisations take the easy option and just look at performance, however, performance by definition is more observable than potential, he said. Only focusing on performance creates a risk that someone who is high performing may already be operating at their optimum level.

“Using performance-based measures or lag indicators such as manager’s rating or performance data to assess an employee’s potential can lead to problems, because not all high performing employees have high potential. Key elements of identifying an employee’s potential should be lead indicators such as learning ability, commitment, and emotional and intellectual intelligence,” Dale said.

It was important for HR to engage executives by defining the strategy and future state of the organisation, he said. “Once that picture is painted link it back to the leadership and people requirements that the organisation is going to need into the future,” Dale said.

“Then go into detail around techniques for assessment and guiding the discussion around how the program is going to be set up, so that high potential staff are case managed throughout the program.”

The study also found that in companies where formal high potential programs are in place, 52 per cent are managed by the HR department, 25 per cent are managed by individual business units and 18 per cent are managed by the executive team.

“Effective high potential programs require an overall awareness of the company’s strategic direction as well as the strengths and weaknesses of the company leaders. The best case scenario is to have the CEO own the program and executive team assume the responsibility of implementing it,” Dale said.

“Having individual business units manage high potential programs is risky, as high potential staff are usually also high performing staff and line managers may be reluctant to encourage them to explore wider opportunities. When opportunities within their team are exhausted, the drive for a clear career path can lead high potential employees to look for opportunities externally.”